Home Loan vs Personal Loan: What Young Couples Should Choose for Their First Home

Buying your first home is a dream milestone for many young couples, but it’s also a major financial commitment. With sky-high property prices, most buyers need external financing. That raises a key question: should you take a joint home loan or opt for a personal loan?

While both can provide funding, they serve different purposes—and choosing the wrong one can lead to higher costs and financial stress.

Why a Joint Home Loan is the Better Option

For couples buying a home together, a joint home loan generally offers more advantages:

Higher Eligibility
By combining both partners’ incomes, you qualify for a bigger loan—enabling you to afford a better or larger home.

“Comparing a home loan with a personal loan is like comparing a hammer to a screwdriver—different tools for different jobs,” says Sanjeev Arora, Director at 360 Realtors.

Lower Interest Rates

• Home loan rates in India range from 8%–9%
• Personal loans can soar above 16%

Longer Tenure, Lower EMI
Home loans can be repaid over 20 to 30 years, spreading out the EMIs. Personal loans usually require repayment in 1 to 5 years, creating higher monthly outflows.

“Longer repayment periods make EMIs more manageable, especially for young couples starting out,” adds Arora.

Dual Tax Benefits
Both partners can claim tax deductions under:

• Section 80C – ₹1.5 lakh each on principal repayment
• Section 24(b) – ₹2 lakh each on interest paid

“Joint claims significantly improve household tax savings,” notes Sahil Agarwal, CEO of Nimbus Realty.

When Personal Loans Can Help

Though not ideal for buying property, personal loans can be useful for:

• Covering token payments or registration fees
• Quick funds during loan processing delays
• Buying land not eligible for home loans

But remember: high interest and short tenure mean they should be used only when necessary—and not as your main funding option.

Joint Loan Affects Both Credit Scores

Taking a joint loan means shared responsibility—and shared impact. Good repayment improves both credit scores, but defaults will hurt both.

It may also restrict future borrowing power, since lenders factor in current liabilities.

“Joint loans show up on both partners’ credit profiles until fully repaid,” warns Arora.

Tips for Couples Before Borrowing

• Check combined income and EMI affordability
• Keep EMI-to-income ratio under 40%
• Maintain an emergency fund (6–12 months of EMIs)
• Choose longer tenure to reduce monthly burden
• Borrow only what you need
• Insure the loan in case of unforeseen events
• Communicate openly about money

Final Verdict: Home Loan or Personal Loan?

If you’re buying your first home with your partner, a joint home loan is the smarter and safer choice. It offers:

• Lower rates
• Higher eligibility
• Tax benefits
• Flexible repayment

Personal loans can support your journey—but they’re better suited for short-term needs, not the main purchase.

In Summary

A house is not just an asset—it’s a shared future. Make financing a joint decision too. Choose wisely today, and secure your peace of mind for tomorrow.